MAYVILLE, Wis.–(BUSINESS WIRE)–Mayville Engineering Company (NYSE: MEC) (the “Company” or “MEC”), a
leading U.S.-based value-added manufacturing partner that provides a
broad range of prototyping and tooling, production fabrication, coating,
assembly and aftermarket services, today announced results for the first
quarter ended March 31, 2019.

“We are pleased with our performance this quarter, which reflects the
ongoing strength of our diverse markets served and agile operations
combined with the addition of DMP near the end of last year,” noted
Robert D. Kamphuis, Chairman, President and CEO of Mayville Engineering
Company. “Our recent IPO and subsequent debt reduction provided a
significant increase in financial flexibility and we are well positioned
to execute our growth strategy going forward. We are excited to partner
our new shareholders with our ESOP shareholders whereby alignment and
commitment to achieving our goals is a competitive advantage.”

First Quarter 2019 ResultsNet
sales were $143.7 million for the first quarter of 2019 compared to
$87.2 million for the same prior year period, an increase of $56.5
million, or 64.8%. DMP contributed $50.2 million, or 57.5%, of the
increase. The remaining $6.3 million, or 7.3% of the increase, was due
to organic growth of our legacy business, mostly driven by increased
volumes.

Manufacturing margins were $19.6 million for the first quarter of 2019
compared to $11.8 million for the same prior year period, an increase of
$7.8 million, or 65.8%. DMP accounted for $5.6 million, or 47.5%, of the
increase. The remaining $2.2 million was driven by improved utilization
in our legacy business mostly due to increased volumes.

Depreciation and amortization expenses were $7.7 million for the first
quarter of 2019 compared to $5.0 million for the same prior year period,
an increase of $2.7 million, or 53.2%. DMP accounted for $0.7 million of
the $0.9 million increase in depreciation expense with the remaining
$0.2 million attributable to the legacy business’ investments in
technology. The $1.7 million increase in amortization expense was solely
driven by amortization of identifiable intangible assets related to the
DMP acquisition.

Other selling, general and administrative expenses were $7.6 million for
the first quarter of 2019 compared to $2.9 million for the same prior
year period. The increase of $4.7 million was primarily driven by
one-time expenses including $1.8 million related to the Company’s
initial public offering (“IPO”) and the DMP acquisition along with $0.9
million related to the DMP contingent consideration fair value
adjustment. The DMP acquired entities accounted for another $1.5 million
of the increase with the remainder mostly attributable to personnel
additions needed to enhance the company’s structure of being a publicly
traded company and support future growth.

Income tax expenses were $0.8 million for the first quarter of 2019,
compared to $29 thousand for the same prior year period. The increase of
$0.7 million is due to the acquisition of the DMP entities, which are
taxable under the provisions of the Internal Revenue Code and certain
state statutes. Prior to the Company’s IPO, the Company’s legacy
business was an S Corporation, where substantially all taxes were passed
to the shareholders and the Company did not pay federal or state
corporate income taxes on its taxable income. In connection with the
IPO, the Company’s legacy business converted to a C Corporation. As a
result, the consolidated business will be subject to paying federal and
state corporate income taxes on its taxable income from May 12, 2019
forward.

EBITDA and EBITDA Margin percent were $13.7 million and 9.5%,
respectively, for the first quarter of 2019, compared to $10.4 million
and 11.9%, respectively, for the first quarter of 2018. The $3.3 million
increase in EBITDA was due to the acquisition of DMP as well as the
organic growth of our legacy business. The decline in EBITDA Margin
percentage from 11.9% to 9.5% was primarily due to one-time expenses
incurred during the first quarter of 2019. These one-time expenses
included $0.4 million of expenses related to the DMP inventory fair
value step-up, $1.8 million of one-time expenses related to the IPO and
the DMP acquisition, and $0.9 million related to the DMP contingent
consideration fair value adjustment.

AdjustedEBITDA and Adjusted EBITDA Margin percent were $16.8
million and 11.7%, respectively, for the first quarter of 2019, compared
to $10.4 million and 11.9%, respectively, for the first quarter of 2018.
The increase in Adjusted EBITDA of $6.4 million was due to our recent
acquisition of DMP and growth in our legacy business.

Balance Sheet and LiquidityOur
total outstanding debt balance, which includes long-term debt and bank
revolving credit notes, was $186.6 million as of March 31, 2019 compared
to $179.9 million as of December 31, 2018. Funds provided by the $6.7
million debt increase were primarily used for capital expenditures.

As previously announced, the Company completed its IPO on May 13, 2019
generating approximately $101.8 million of total proceeds net of
underwriting discounts and commissions. All of these proceeds have been
used to pay down debt balances.

OutlookBased on the Company’s
2018 performance, the overall economic climate, and industry trends, the
Company is outlining its 2019 financial outlook as follows:

Net sales are expected to be between $558 million to $570 million

Adjusted EBITDA is expected to be between $66 million and $72 million

Kamphuis added, “As we approach mid-year, we are providing annual
financial guidance for 2019, which represents a strong improvement over
last year based on the acquisition of DMP and organic growth across our
business. As we look to the second half of the year, we have quickly
adapted to life as a public company and remain confident in our ability
to execute our strategy and partner with our customers to provide
meaningful value to their operations.”

Conference CallThe Company
will host a conference call on Wednesday, May 29th, 2019 at
10:00 a.m. Eastern Time (9:00 a.m. Central Time).

For a live Internet webcast of the conference call, visit www.mecinc.com and
click on the link to the live webcast on the Investors page.

For telephone access to the conference, call (866) 652-5200 within the
United States, call (855)-669-9657 within Canada, or +1 (412) 317-6060
from outside the United States and Canada.

Forward Looking StatementsThis
press-release includes forward-looking statements that reflect our
plans, estimates and beliefs. Such statements involve risks and
uncertainties. Our actual results may differ materially from those
contemplated by these forward-looking statements as a result of various
factors, including those set forth in “Risk Factors” and “Cautionary
Statement Regarding Forward-Looking Statements” in the Company’s
previously filed registration statement on Form S-1. Important factors
that could cause actual results or events to differ materially from
those expressed in forward-looking statements include, but are not
limited to: failure to compete successfully in our markets; risks
relating to developments in the industries in which our customers
operate; our ability to maintain our manufacturing, engineering and
technological expertise; the loss of any of our large customers or the
loss of their respective market shares; risks related to scheduling
production accurately and maximizing efficiency; our ability to realize
net sales represented by our awarded business; our ability to
successfully identify or integrate acquisitions; risks related to
entering new markets; our ability to develop new and innovative
processes and gain customer acceptance of such processes; our ability to
recruit and retain our key executive officers, managers and
trade-skilled personnel; risks related to our information technology
systems and infrastructure; manufacturing risks, including delays and
technical problems, issues with third-party suppliers, environmental
risks and applicable statutory and regulatory requirements; political
and economic developments, including foreign trade relations and
associated tariffs; volatility in the prices or availability of raw
materials critical to our business; results of legal disputes, including
product liability, intellectual property infringement and other claims;
risks associated with our capital-intensive industry; risks related to
our treatment as an S Corporation prior to the consummation of the
initial public offering; risks related to our employee stock ownership
plan’s treatment as a tax-qualified retirement plan; and our ability to
remediate the material weaknesses in internal control over financial
reporting identified in preparing our audited consolidated financial
statements and to subsequently maintain effective internal control over
financial reporting. This discussion should be read in conjunction with
our audited consolidated financial statements included in the Company’s
previously filed registration statement on Form S-1. We undertake no
obligation to update or revise any forward-looking statements after the
date on which any such statement is made, whether as a result of new
information, future events or otherwise.

About Mayville Engineering CompanyMEC
is a leading U.S.-based value-added manufacturing partner that provides
a broad range of prototyping and tooling, production fabrication,
coating, assembly and aftermarket components. Our customers operate in
diverse end markets, including heavy- and medium-duty commercial
vehicles, construction, powersports, agriculture, military and other end
markets. We have developed long-standing relationships with our
blue-chip customers based upon a high level of experience, trust and
confidence.

Our one operating segment focuses on producing metal components that are
used in a broad range of heavy- and medium-duty commercial vehicles,
construction, powersports, agricultural, military and other products.

Use of Non-GAAP Financial MeasuresThis
press release contains financial information calculated in a manner
other than in accordance with U.S. generally accepted accounting
principles (“GAAP”).

The non-GAAP measures used in this press release are EBITDA, EBITDA
Margin, Adjusted EBITDA and Adjusted EBITDA Margin.

EBITDA represents net income before interest expense, provision
(benefit) for income taxes, depreciation, and amortization. EBITDA
Margin represents EBITDA as a percentage of net sales for each period.
Adjusted EBITDA represents EBITDA before transaction fees incurred in
connection with the DMP acquisition and our initial public offering, the
loss on debt extinguishment relating to our December 2018 credit
agreement, and non-cash purchase accounting charges including costs
recognized on the step-up of acquired inventory and contingent
consideration fair value adjustments. Adjusted EBITDA Margin represents
Adjusted EBITDA as a percentage of net sales for each period. These
metrics are supplemental measures of our operating performance that are
neither required by, nor presented in accordance with, GAAP. These
measures should not be considered as an alternative to net income or any
other performance measure derived in accordance with GAAP as an
indicator of our operating performance. We present Adjusted EBITDA and
Adjusted EBITDA Margin as management uses these measures as key
performance indicators, and we believe they are measures frequently used
by securities analysts, investors and other parties to evaluate
companies in our industry. These measures have limitations as analytical
tools and should not be considered in isolation or as substitutes for
analysis of our results as reported under GAAP.

Our calculation of EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted
EBITDA Margin may not be comparable to the similarly named measures
reported by other companies. Potential differences between our measures
of EBITDA and Adjusted EBITDA compared to other similar companies’
measures of EBITDA and Adjusted EBITDA may include differences in
capital structure and tax positions.

Please reference our reconciliation of net income, the most directly
comparable measure calculated in accordance with GAAP, to EBITDA and
Adjusted EBITDA, and the calculation of EBITDA Margin and Adjusted
EBITDA Margin included in this press release.

Receivables, net of allowances for doubtful accounts of $759 as of
March 31, 2019 and $801 as of December 31, 2018

67,759

52,298

Inventories, net

53,480

53,405

Tooling in progress

2,672

2,318

Prepaid expenses and other current assets

2,563

1,649

Total current assets

126,502

112,759

Property, plant and equipment, net

125,577

123,883

Goodwill

70,534

69,437

Intangible assets-net

80,203

82,879

Capital lease, net

1,880

1,953

Other long-term assets

762

814

Total assets

$

405,459

$

391,725

LIABILITIES AND TEMPORARY EQUITY

Accounts payable

$

50,327

$

45,992

Current portion of capital lease obligation

275

281

Current portion of long-term debt

10,549

8,606

Accrued liabilities:

Salaries, wages, and payroll taxes

7,894

7,548

Profit sharing and bonus

3,563

6,124

Other current liabilities

14,840

14,610

Total current liabilities

87,449

83,161

Bank revolving credit notes

66,389

59,629

Capital lease obligation, less current maturities

1,630

1,697

Other long-term debt, less current maturities

109,669

111,675

Deferred compensation and long-term incentive, less current portion

14,498

13,351

Deferred income taxes

20,275

19,123

Other long-term liabilities

100

100

Total liabilities

300,010

288,736

Redeemable common shares, no par value, stated at redemption value
of outstanding shares, 60,045,300 authorized*, 38,623,806 shares
issued* at March 31, 2019 and December 31, 2018

133,806

133,806

Retained earnings

29,301

26,842

Treasury stock at cost, 25,180,330 shares* at March 31, 2019 and
December 31, 2018

(57,659

)

(57,659

)

Total temporary equity

105,449

102,989

Total liabilities and temporary equity

$

405,459

$

391,725

* Giving effect to the issuance of a stock dividend of
approximately 1,334.34-for-1 related to the IPO, as if the IPO
occurred at the beginning of 2018. There were 45,000 shares
authorized, 28,946 shares issued and 18,871 treasury shares at
March 31, 2019 and December 31, 2018.